RegulationAccounting Standards‘Toxic’ asset market rally offers chance of fair value gains

‘Toxic’ asset market rally offers chance of fair value gains

Rise in credit markets could add billions of dollars onto US banks’ books

Rallying credit markets are giving US banks the opportunity to book
accounting gains on their ‘toxic’ securities for the first time since suffering
huge losses during the sub-prime crisis.

Fair value accounting gives the banks the chance to use the recovering
markets to write-up the value of their assets, with some believing the gains
could add up to billions of dollars, the Financial Times reported.

However it is thought that auditors and boards will advise caution with such
a strategy as price rises may be temporary and another dive in the market could
cause further write-downs.

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